CA Contractors Law Practice 1 Exam
A contractor and a homeowner sign a home solicitation contract. If the owner lawfully
cancels the contract, how long does the contractor have to pick up unused materials
that were delivered to the owner's property?
a. within 24 hours after cancellation
b. within 10 days after cancellation
c. within 20 days after cancellation
d. It's too late. If the materials are delivered to the property before a notice of
cancellation is received, the materials become the property of the owner. - ANSWER-c.
within 20 days after cancellation
A contractor entered into a home improvement contract for more than $500 with Mrs.
Swenson to remodel her kitchen and bathroom. The contract calls for a down payment
before work is to begin. According to the Business and Professions Code, how much
may the contractor accept from Mrs. Swenson as down payment for the work?
a. The contractor may accept as much as Mrs. Swenson agrees to pay.
b. The down payment is limited to $1,000 or 10% of the total price, whichever is less.
c. The contractor may require enough of a down payment to cover the total cost of
materials, but not labor costs.
d. Nothing. The contractor must wait until the work is completed to accept any payment.
- ANSWER-b. The down payment is limited to $1,000 or 10% of the total price,
whichever is less.
A contractor has had a problem with employees stealing tools and equipment from job
sites. When conducting job interviews, may the contractor ask prospective employees
about their arrest records?
a. It is legal to ask prospective employees about arrests not leading to convictions.
b. It is not legal to ask prospective employees about arrests not leading to convictions.
c. It is legal for a private employer to ask about arrests not leading to convictions, but it
would not be legal for city or county agencies to ask about such arrests.
d. It is legal for a private employer to ask about arrests leading to convictions, but it
would not be legal for a federal, state, or local public agency to do so. - ANSWER-b. It is
not legal to ask prospective employees about arrests not leading to convictions.
A contractor hires a subcontractor to demolish a concrete wall. Who is responsbile for
supplying safety goggles?
a. Cal/OSHA
b. subcontractor
c. property owner
d. contractor - ANSWER-b. subcontractor
A contractor is looking for an insurance policy to cover a high degree of exposure to
risk. Of the following, which policy would be best for this purpose?
a. property
,b. general liability
c. builder's risk
d. umbrella - ANSWER-d. umbrella
A contractor meets Mr. Jones at his home to discuss remodeling. The contractor and
Mr. Jones sign a contrat that includes a three-day cancellation form. After the contractor
leaves, Mr. Jones decides not to have the work done. Instead of using the cancellation
form, Mr. Jones sends the contractor a letter by first-class mail stating that he is
canceling the contract. Is Mr. Jones' cancellation effective?
a. No. Mr. Jones did not return the contract with the letter.
b. No. Mr. Jones did not sign and return the cancellation form.
c. Yes. Mr. Jones' letter does cancel the contract because it indicates his intention not to
be bound by the contract.
d. No. However, the letter would have cancelled the contract had it been sent by
certified or registered mail. - ANSWER-c. Yes. Mr. Jones' letter does cancel the contract
because it indicates his intention not to be bound by the contract.
A contractor usually will not be held liable for a suppllier going on strike, but if your
supplier did go on strike what would you do?
a. Contact the owner immediately.
b. Contact the architect immediately.
c. Contact the general building contractor immediately.
d. Continue work as usual. - ANSWER-a. Contact the owner immediately.
A contractor, on his own initiative, changed the design of a building and carried out the
change. The owner rejected the change and stated that the building has lost market
value. If the owner takes the contractor to court and obtains a favorable judgement, the
owner is:
a. due the cost of repairs or the loss of market value
b. due any loss of profits
c. entitled to a new building
d. due only the loss of market value - ANSWER-a. due the cost of repairs or the loss of
market value
A general contractor has obtained bids from several subcontractors for a private project.
He notices that one bid is substantially lower than the rest. Is it ethical and a good
business practice for this contractor to inform the subcontractor that the bid is
substantially lower than the bids of the other subcontractors?
a. No. It would be unethical for the contractor to inform any subcontractor that their bid
is substantially lower than the other bids, even if the contractor believes that the
subcontractor has made an error.
b. Yes. If the contractor believes that the subcontractor has made an error in compiling
his bid, the contractor should disclose the amounts of the other subcontractors' bids to
the subcontractor, so the subcontractor can determine the extent of his error.
c. Yes. If the contractor has reason to believe that the subcontractor has made an error
in preparing his bid, the contractor should notify th - ANSWER-c. Yes. If the contractor
, has reason to believe that the subcontractor has made an error in preparing his bid, the
contractor should notify the subcontractor of the apparent error, but the contractor may
not disclose the amounts of the other bids.
A mechanic's lien is a written document that must be signed and verified by the
claimant. The first and third steps a contractor should take in filing a lien are listed
below: Step 1): Obtain the exact legal description of the property; Step 2): _________;
Step 3: Find out if the person requesting the work of improvement is the owner.
What is Step 2:
a. Determine the amount of the lien claim.
b. Find out the name of the legal owner of the property as well as the percent of
ownership.
c. List the attorney representing the contractor.
d. List the attorney representing the owner. - ANSWER-b. Find out the name of the legal
owner of the property as well as the percent of ownership.
A notice of completion must be recorded within:
a. 10 days after work is completed
b. 10 days after work has ceased
c. 30 days after work is completed
d. 60 days after work has ceased - ANSWER-a. 10 days after work is completed
A prime contractor entered into a construction contract with a subcontractor. An
employee of the subcontractor was injured, bu unfortunately, the subcontractor had not
secured workers' compensation coverage. Which of the following statements best
describes the situation, except in cased of fraud?
a. The subcontractor is guilty, but the prime contactor is not responsible.
b. The prime contractor is guilty, but the subcontractor is not responsible.
c. Neither the prime contractor nor the subcontractor are responsible.
d. The subcontractor is guilty, but the prime contractor must take responsibility for the
injuries. - ANSWER-d. The subcontractor is guilty, but the prime contractor must take
responsibility for the injuries.
A subcontractor or material supplier has ____ days to file a lien once a notice of
completion has been recorded.
a. 10
b. 30
c. 60
d. 90 - ANSWER-b. 30 days
A subcontractor who does not serve a preliminary notice:
a. may not sever a stop notice but may file a mechanic's lien
b. may not file a mechanic's lien but may serve a stop notice
c. loses both stop notice and mechanic's lien rights
d. loses nothing because subcontractors are not required to file preliminary notices -
ANSWER-c. loses both stop notice and mechanic's lien rights
A contractor and a homeowner sign a home solicitation contract. If the owner lawfully
cancels the contract, how long does the contractor have to pick up unused materials
that were delivered to the owner's property?
a. within 24 hours after cancellation
b. within 10 days after cancellation
c. within 20 days after cancellation
d. It's too late. If the materials are delivered to the property before a notice of
cancellation is received, the materials become the property of the owner. - ANSWER-c.
within 20 days after cancellation
A contractor entered into a home improvement contract for more than $500 with Mrs.
Swenson to remodel her kitchen and bathroom. The contract calls for a down payment
before work is to begin. According to the Business and Professions Code, how much
may the contractor accept from Mrs. Swenson as down payment for the work?
a. The contractor may accept as much as Mrs. Swenson agrees to pay.
b. The down payment is limited to $1,000 or 10% of the total price, whichever is less.
c. The contractor may require enough of a down payment to cover the total cost of
materials, but not labor costs.
d. Nothing. The contractor must wait until the work is completed to accept any payment.
- ANSWER-b. The down payment is limited to $1,000 or 10% of the total price,
whichever is less.
A contractor has had a problem with employees stealing tools and equipment from job
sites. When conducting job interviews, may the contractor ask prospective employees
about their arrest records?
a. It is legal to ask prospective employees about arrests not leading to convictions.
b. It is not legal to ask prospective employees about arrests not leading to convictions.
c. It is legal for a private employer to ask about arrests not leading to convictions, but it
would not be legal for city or county agencies to ask about such arrests.
d. It is legal for a private employer to ask about arrests leading to convictions, but it
would not be legal for a federal, state, or local public agency to do so. - ANSWER-b. It is
not legal to ask prospective employees about arrests not leading to convictions.
A contractor hires a subcontractor to demolish a concrete wall. Who is responsbile for
supplying safety goggles?
a. Cal/OSHA
b. subcontractor
c. property owner
d. contractor - ANSWER-b. subcontractor
A contractor is looking for an insurance policy to cover a high degree of exposure to
risk. Of the following, which policy would be best for this purpose?
a. property
,b. general liability
c. builder's risk
d. umbrella - ANSWER-d. umbrella
A contractor meets Mr. Jones at his home to discuss remodeling. The contractor and
Mr. Jones sign a contrat that includes a three-day cancellation form. After the contractor
leaves, Mr. Jones decides not to have the work done. Instead of using the cancellation
form, Mr. Jones sends the contractor a letter by first-class mail stating that he is
canceling the contract. Is Mr. Jones' cancellation effective?
a. No. Mr. Jones did not return the contract with the letter.
b. No. Mr. Jones did not sign and return the cancellation form.
c. Yes. Mr. Jones' letter does cancel the contract because it indicates his intention not to
be bound by the contract.
d. No. However, the letter would have cancelled the contract had it been sent by
certified or registered mail. - ANSWER-c. Yes. Mr. Jones' letter does cancel the contract
because it indicates his intention not to be bound by the contract.
A contractor usually will not be held liable for a suppllier going on strike, but if your
supplier did go on strike what would you do?
a. Contact the owner immediately.
b. Contact the architect immediately.
c. Contact the general building contractor immediately.
d. Continue work as usual. - ANSWER-a. Contact the owner immediately.
A contractor, on his own initiative, changed the design of a building and carried out the
change. The owner rejected the change and stated that the building has lost market
value. If the owner takes the contractor to court and obtains a favorable judgement, the
owner is:
a. due the cost of repairs or the loss of market value
b. due any loss of profits
c. entitled to a new building
d. due only the loss of market value - ANSWER-a. due the cost of repairs or the loss of
market value
A general contractor has obtained bids from several subcontractors for a private project.
He notices that one bid is substantially lower than the rest. Is it ethical and a good
business practice for this contractor to inform the subcontractor that the bid is
substantially lower than the bids of the other subcontractors?
a. No. It would be unethical for the contractor to inform any subcontractor that their bid
is substantially lower than the other bids, even if the contractor believes that the
subcontractor has made an error.
b. Yes. If the contractor believes that the subcontractor has made an error in compiling
his bid, the contractor should disclose the amounts of the other subcontractors' bids to
the subcontractor, so the subcontractor can determine the extent of his error.
c. Yes. If the contractor has reason to believe that the subcontractor has made an error
in preparing his bid, the contractor should notify th - ANSWER-c. Yes. If the contractor
, has reason to believe that the subcontractor has made an error in preparing his bid, the
contractor should notify the subcontractor of the apparent error, but the contractor may
not disclose the amounts of the other bids.
A mechanic's lien is a written document that must be signed and verified by the
claimant. The first and third steps a contractor should take in filing a lien are listed
below: Step 1): Obtain the exact legal description of the property; Step 2): _________;
Step 3: Find out if the person requesting the work of improvement is the owner.
What is Step 2:
a. Determine the amount of the lien claim.
b. Find out the name of the legal owner of the property as well as the percent of
ownership.
c. List the attorney representing the contractor.
d. List the attorney representing the owner. - ANSWER-b. Find out the name of the legal
owner of the property as well as the percent of ownership.
A notice of completion must be recorded within:
a. 10 days after work is completed
b. 10 days after work has ceased
c. 30 days after work is completed
d. 60 days after work has ceased - ANSWER-a. 10 days after work is completed
A prime contractor entered into a construction contract with a subcontractor. An
employee of the subcontractor was injured, bu unfortunately, the subcontractor had not
secured workers' compensation coverage. Which of the following statements best
describes the situation, except in cased of fraud?
a. The subcontractor is guilty, but the prime contactor is not responsible.
b. The prime contractor is guilty, but the subcontractor is not responsible.
c. Neither the prime contractor nor the subcontractor are responsible.
d. The subcontractor is guilty, but the prime contractor must take responsibility for the
injuries. - ANSWER-d. The subcontractor is guilty, but the prime contractor must take
responsibility for the injuries.
A subcontractor or material supplier has ____ days to file a lien once a notice of
completion has been recorded.
a. 10
b. 30
c. 60
d. 90 - ANSWER-b. 30 days
A subcontractor who does not serve a preliminary notice:
a. may not sever a stop notice but may file a mechanic's lien
b. may not file a mechanic's lien but may serve a stop notice
c. loses both stop notice and mechanic's lien rights
d. loses nothing because subcontractors are not required to file preliminary notices -
ANSWER-c. loses both stop notice and mechanic's lien rights
